Insurance: other; penalties for fraudulent insurance acts; increase. Amends sec. 4511 of 1956 PA 218 (MCL 500.4511).
Summary
HB4716 amends Michigan’s Insurance Code to substantially increase criminal penalties for fraudulent insurance acts and to create a more detailed, tiered penalty structure based on the dollar amount of the fraud, the number of fraudulent claims, and the offender’s prior convictions. The bill preserves the existing requirement that people convicted of insurance fraud pay restitution, and it continues to require courts to notify the appropriate licensing authority when a practitioner or insurer is found responsible for or guilty of fraud.
Under the bill, low-level fraudulent claims can be treated as misdemeanors, while larger schemes are punished as felonies with escalating maximum prison terms and fines. The bill also allows multiple fraudulent claims made within a 12-month period as part of the same scheme to be aggregated, which can move conduct into a higher penalty tier. It further specifies how prior convictions are to be alleged and proven for sentencing enhancement purposes.
Impact
The bill would amend section 4511 of the Insurance Code of 1956, replacing the prior single felony penalty for fraudulent insurance acts with a graduated sentencing scheme tied to the scale and repetition of the fraud. It affects people accused or convicted of insurance fraud, including individuals, practitioners, and insurers, and it increases potential exposure to imprisonment, fines, restitution, and professional licensing consequences. It also interacts with the code of criminal procedure and the Crime Victim’s Rights Act through its restitution provisions.
Sentiment
The available voting history suggests broad bipartisan support for the bill. It was reported from committee without amendment on a 10-0 vote and later passed the House on third reading with 101 yeas and 2 nays, indicating strong agreement that insurance fraud penalties should be strengthened. The immediate-effect vote also suggests lawmakers viewed the measure as urgent or noncontroversial.
Contention
The main policy issue is the severity and structure of punishment for insurance fraud. Support appears to center on tougher deterrence, especially for larger or repeated fraudulent schemes, while the tiered approach suggests an effort to distinguish minor from major offenses. Any potential concern would likely involve whether the enhanced penalties, aggregation rule, and prior-conviction enhancements could sweep in lower-level conduct or increase prosecutorial leverage, but the recorded votes show little visible opposition in the legislative process.